A Very Bad Idea

If every patient in America were a Medicare beneficiary, many hospitals would go out of business.
If every patient in America were a Medicare beneficiary, many hospitals would go out of business.

Sen. Bernie Sanders’ 2017 Medicare for All bill (S.1804) would guarantee exceptional care to all Americans while reducing health spending by $5.11 trillion. At least that’s what a new study from researchers at the University of Massachusetts-Amherst’s Political Economy Research Institute, which is co-directed by Professor Robert Pollin, claims.

Sound too good to be true? It is. The study’s assumptions are completely unrealistic. Medicare for All would be a disaster for patients and taxpayers alike. An analysis from the Urban Institute pegged the cost of Sen. Sanders’ 2016 plan at $32 trillion over 10 years in new federal spending. And Charles Blahous at the Mercatus Center analyzed his 2017 bill and estimated it would cost $32.6 trillion over 10 years, after accounting for lower administrative and drug costs.

The authors of the UMass study evidently studied economic modeling at the College of Magical Thinking. They estimate healthcare utilization will rise 12 percent — or $390 billion a year — since millions of uninsured or underinsured people will gain coverage and visit healthcare providers more often. Yet they insist overall healthcare expenditures will fall 19 percent thanks to administrative savings, drug price controls, and reduced payments to doctors and hospitals.

In theory, Medicare for All would streamline the insurance claims and billing process. The authors estimate hospitals, clinics, and doctor’s offices would spend 65 percent less on administrative costs since they’d no longer have to deal with dozens of different insurers.

In reality, these administrative savings won’t materialize. Government bureaucrats don’t process claims any more efficiently than private-sector workers. In fact, Medicare spends more dollars per enrollee on administrative costs than private insurers.

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